Ahead of LIC IPO, Irdai permits insurers to speculate extra in BFSI

Paving the way in which for extra funding within the monetary sector and insurance coverage corporations, insurance coverage regulator Irdai has hiked the publicity restrict of insurance coverage corporations in such corporations to 30 per cent.

The hike within the publicity restrict comes forward of the mega IPO of Life Insurance Corporation (LIC). “The Authority in exercise of its powers conferred under the Irdai (Investment) Regulations, 2016, permits all insurers to have exposure to financial and insurance activities (as per section K of NIC classification) up to 30 per cent of investment assets. Accordingly, the limit of 25 per cent of investment assets mentioned in Irdai (Investment) Regulations, 2016 stands revised to a limit of 30 per cent of Investment Assets,” Irdai mentioned in a round. The Irdai transfer is anticipated to permit insurance coverage corporations to speculate extra funds within the LIC IPO, insurance coverage officers mentioned.

Weightage of monetary and insurance coverage corporations in broader Indian market indices has constantly gone up over the previous couple of years. “Life insurance industry had been seeking an increase in the current 25 per cent sectoral limit on exposure to the BFSI sector. The increase in this limit to 30 per cent will provide the much-needed leeway for the insurance companies to increase their exposure to the sector and bring it closer to the broader market levels,” mentioned Sampath Reddy, chief funding officer, Bajaj Allianz Life.

“Additionally, they would also be in position to hold a much wider basket of diverse stocks within the sector and participate in the promising Indian growth story through the same,” Reddy mentioned. LIC on Wednesday priced its preliminary public providing (IPO) within the vary of Rs 902-949 per share. LIC IPO will open on May 4 and can shut on May 9.

Insurance corporations led by LIC, New India Assurance and others are main gamers within the capital market. LIC is the most important investor in inventory markets. LIC booked revenue price Rs 42,862 crore from the sale of investments, primarily from equities, within the first 9 months of the fiscal yr 2022.

In 2013, Irdai allowed insurance coverage corporations to carry as much as 15 per cent stake in any firm, up from 10 per cent.